Brazil Finance Minister Dario Durigan said on Monday the government will pursue a higher effective primary surplus next year, as the Treasury intervened in the bond market after a sharp post-election selloff.
Brazil's finance minister said on Monday that the government will pursue a higher effective primary surplus next year, as the Treasury stepped into the bond market to steady trading after a sharp selloff that followed Luiz Inacio Lula da Silva's re-election. Finance Minister Dario Durigan made the pledge in a Broadcast interview, without giving a figure for the larger surplus.
Durigan said the government plans to send legislation to Congress in 2026 requiring policymakers to formally target the midpoint of the primary-balance goal. The Treasury intervened in the bond market on Monday, cancelling scheduled debt auctions and conducting extraordinary buyback operations to “ensure rationality” after a sharp jump in long-term interest-rate futures triggered by the election result.
Brazil's fiscal target for next year is a primary surplus, excluding interest payments, of 0.5 percent of gross domestic product, with a tolerance band of 0.25 percentage points either way. In August the government projected an effective primary surplus of 0.1 percent of GDP for next year, which if achieved would be Brazil's first fiscal surplus since 2022. Gross public debt stands at 82.9 percent of GDP, up more than 10 percentage points during Lula's current term. On Monday the Bovespa fell about 13.5 percent and the real fell sharply, after markets had priced in a win for Flavio Bolsonaro.
The pledge, the intervention and the fiscal figures come from Reuters' reporting of the Broadcast interview; the Broadcast original was not retrieved, so the minister's words are given here as Reuters reports them. The surplus figure itself is explicitly unspecified, and no figure has been invented for it. The view that investors consider the pace of fiscal consolidation too slow is market commentary, not a government statement, and the market moves are from separate market-close reporting.
The intervention is the new government's first market test. Cancelling auctions and buying back debt can calm a disorderly session, but it does not by itself close a fiscal gap that markets are now pricing with a debt load above 80 percent of GDP and a surplus target that still leaves little room for error.
The next markers are the legislation promised for 2026 and whether the higher effective surplus materialises in the budget. Until a figure is attached to the pledge, investors can judge the commitment only by the Treasury's actions in the market and by the fiscal outturn, not by the promise alone.